Health care access, quality and affordability will be among the top concerns for the state’s Department of Managed Health Care as it vets the proposed $54 billion merger of insurance giant Anthem Inc. and rival Cigna Corp., the department’s director, Shelley Rouillard, said during a public hearing in Sacramento Friday.
Those questions, as well as the handling of grievances and appeals, “are serious issues that I personally feel very strongly about,” Rouillard said. “That’s something we’ll be in discussions with the plans about going forward.”
Anthem’s acquisition of Cigna would create the largest health insurer, by enrollment, in the state and the nation. It, along with a planned $37 billion combination of Aetna Inc. and Humana Inc. — which the department is also evaluating — would consolidate the nation’s top five insurers into three companies.
The Department of Managed Health Care is expected to impose certain conditions on the Anthem-Cigna deal to address consumer worries about the potential impact of large-scale consolidation.
The Department of Insurance, California’s other health plan regulator, also plans to weigh in on the deal and has scheduled a hearing on it later this month. That department’s top official, Insurance Commissioner Dave Jones, has publicly expressed his skepticism about the consumer impact of health insurance mergers.
The Anthem-Cigna deal also needs regulatory sign-off from the federal government and 23 other states, according to the Department of Managed Health Care. Some of those states have already given their approval.
Critics, in California and elsewhere, have warned that consolidation could mean fewer choices and higher costs for consumers, as well as smaller payments to doctors and other medical providers. The insurance companies say economies of scale will allow more efficient operations, generating savings that can be passed along to consumers.
Anthem, which operates Blue Cross policies in 14 states, announced its plan to purchase Cigna last summer. If the deal goes through, the new company would skip ahead of Kaiser Permanente as the state’s largest insurer.
Nationwide, an Anthem-Cigna union would cover some 53 million policyholders, overtaking United Health Inc., which has close to 46 million members, according to 2013 data, the most recent available. An Aetna-Humana combo would account for another 33 million, meaning the nation’s top three insurers would collectively provide coverage for 132 million people — more than 40 percent of the U.S. population.
The Department of Managed Health Care and the Department of Insurance are also taking a look at a proposal by Centene Corp. to buy Health Net Inc. for about $7 billion.
Consumer advocates and medical providers who spoke at the Department of Managed Health Care’s hearing Friday urged officials not to let the insurance companies off easy. They argued that Anthem should be held responsible for addressing its shortcomings before taking over Cigna.
Tam Ma, policy counsel with Health Access, a consumer advocacy coalition, cited Anthem’s alleged poor handling of consumer complaints, inactive provider directories and inadequate efforts to meet the language needs of its enrollees.
“These issues are particularly important because 40 percent of Medi-Cal and subsidy-eligible Covered California consumers speak a language other than English,” Ma said. “The fact that Anthem is not complying with language access requirements is a critical indicator that it may not be providing quality care to all of its enrollees.”
She pointed out that last year, the state auditor found 23 percent of the physician listings in Anthem’s Medi-Cal directory for Fresno County to be inaccurate. Deficiencies such as these, she said, make it difficult for consumers to know which doctors in their network are accepting new patients.
“We don’t think they should be allowed to get bigger unless they commit to getting better,” Ma said.
She also argued that the merger should not be approved without a proviso guarding against unduly steep rate increases for consumers.
On the other side of the argument, Jay Wagner, Anthem’s vice president and counsel, said the merger will ultimately simplify access, improve affordability and allow for a more efficient delivery of services.
“At its core, the proposed transaction represents a significant step forward to a 21st century health system,” Wagner said.
He noted that consumers will be able to take advantage of Anthem’s large provider network, 24/7 access to licensed providers through telemedicine, as well as Cigna’s wellness programs and strong dental, vision and disability coverage.
While most critics suggested conditions be imposed on the merger, some said the department should reject the deal outright. Chuck Felder, a physical therapist, expressed concern that payments to providers — which he deemed low already — could be cut further in the event of health plan consolidation.
“I’m seeing a wave sweep across the country of payers requiring more out of the providers while simultaneously paying them less,” Felder said.
He said this gives providers two options: reject a low-paying contract and risk losing patient volume, or sign a contract that pays less than the cost of doing business and withhold some patient care to compensate.
Rouillard, in an interview after the meeting, said that was the first time anyone had suggested the Anthem-Cigna merger be blocked outright. Most critics, she said, will propose conditions. “That’s a new twist in this particular transaction.”
The department has previously set stringent conditions for the approval of mergers, Rouillard said. She cited the demands placed on Blue Shield of California when it acquired Los Angeles-based Care 1st, a Medicare and Medi-Cal managed care company, last fall.
As a condition of approval, Blue Shield committed to investing $200 million to increase transparency and accessibility, of which $50 million was earmarked for improving the Medi-Cal delivery system.
The managed health care department will be taking public comments on the Anthem-Cigna merger plan through Friday, March 11. Comments may be submitted to firstname.lastname@example.org.